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Treasurers: Ditch Excel and free-up your day

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14th Jun 2013
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Corporate treasurers should leave labour-intensive spreadsheets alone and release release time for more strategic activities. It’s time to cut the apron strings, argues Kyriba director Tim Wheatcroft.

Despite the widespread availability of dedicated tools, spreadsheets remain a fixture in many corporate treasury departments. Yet failing to automate essential activity such as cash management and forecasting could not only limit productivity, it also reduces the strategic analysis and input they can provide. 

Earlier this year, Kyriba surveyed more than 250 members of the Association of Corporate Treasurers (ACT). The research explored key issues for the modern treasury department: how they work, how they interact with the rest of their organisation and how their roles are evolving within the changing regulatory and economic environment. The survey also looked at what tools treasury teams use and how they affect productivity and the type of activities treasurers undertake. 

Overall, the survey found that almost 40% of companies rely on spreadsheets to manage their cash position and forecasting. This figure rose significantly for smaller enterprises (with revenues of up to £100m) of which 48% rely on Excel. Yet, even among much larger companies turning over £1bn-£10bn, a fifth of treasury teams still use spreadsheets, as do one in nine treasury teams in £10bn+ companies.

This high rate of spreadsheet use means that many treasury teams spend significantly more time on manual data entry tasks. Companies using spreadsheets for treasury reporting spend an average of 36 hours per month on manual and operational tasks – 38% more time than those using a treasury platform.

Significantly, firms that use their ERP solution for treasury reporting (typically the largest, best-resourced companies) spend longer on operational tasks than those using treasury-specific platforms, with these tasks taking up an average of 33 hours per month.

Over the course of a year, this equates to spreadsheet users spending an additional 130 hours (more than three weeks) on manual tasks, compared with those using treasury-specific applications. 

So what are the disadvantages of working with Excel as a tool for managing treasury operations?

Aside from the most obvious drawback of lost productivity through the repetition of manual tasks, spreadsheets simply don’t provide the functionality, control or visibility to run an effective, efficient and secure treasury operation. The lack of audit trail and separation of duties can lead to both inadvertent and malicious errors being entered into the system, which could take hours, days or even weeks to identify and resolve.

A good (or rather bad) example of this was JP Morgan’s recent ‘London Whale’ incident. According to its internal report, The Model Review Group noted that “the VaR [Value at Risk] computation was being done on spreadsheets using a manual process. It was therefore ‘error prone’ and ‘not easily scalable’”.

Add to this that data was copied and pasted into the spreadsheets “without sufficient quality control” and it points to huge flaws within JP Morgan’s process – highlighting the inherent dangers of using spreadsheets.

Even when major errors don’t occur, spreadsheets simply don’t provide the level of visibility for treasury teams to make effective financial decisions, be it for more effective cash optimisation, analysing borrowing and capital planning, or managing a company’s risk exposures. In addition, if users are spending much of their time simply managing day to day tasks, the amount of time (and brainpower) available for high-value tasks will be limited.

To meet these requirements, many companies are starting to adopt treasury management systems (TMS). These platforms are dedicated to cash and risk management, linking both to a company’s internal account and ERP solutions as well as its external banking partners. Overall, 44% of the ACT companies surveyed use some type of TMS, increasing to over 60% among larger organisations.

The most widely adopted treasury management platforms are server-installed, which are used in 37% of companies.

Cloud-based technology already enjoys significant adoption across sales, customer relationship management, human resources and other key business functions, but adoption among treasury and finance teams remains low. However, this number is increasing as the overall shift to cloud-based business platforms takes hold within the enterprise and the benefits of software-as-a-service (SaaS) become more widely appreciated.

Aside from important productivity gains, arguably the most significant value that lies in making the leap from spreadsheets to next-generation treasury solutions is the chance to gain access to increased financial controls and visibility: whether tackling cash and liquidity management or managing critical priorities such as compliance and risk, powerful treasury automation tools can help to support the optimisation of treasury processes and provide a springboard for treasurers to deliver a deeper level of strategic and analytical input.

Tim Wheatcroft is a director of Kyriba, a leading provider of cloud-based treasury solutions.

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By pn
18th Jun 2013 10:33

Cloud-based technology .....

This appears to be a sales geared article. 

 

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